Alternative debt limit measure goes to Boulder ballot

City voters to decide on utility debt limits, new taxes, fracking moratorium

Despite warnings from the city's attorneys and bond counsel that the measure could have unintended consequences, the Boulder City Council will ask voters to approve a $214 million debt limit on the purchase price of Xcel Energy's system and any stranded costs.

After extensive debate -- during which the council considered scrapping the whole idea of a ballot measure to compete with a citizen initiative with ties to Xcel -- the City Council voted 6-3 on Tuesday night to place the charter amendment on the November ballot.

During the same meeting, the council unanimously approved seven other ballot measures, three of which deal with general sales tax for open space, roads and the general fund, and one of which would impose special sales and excise taxes on recreational marijuana.

They also placed on the ballot the citizen initiative charter amendment as a ministerial act. That charter amendment would require a vote on the total debt limit of the utility, that the vote occur in a general municipal election, which only occurs in odd years, and that affected county residents be able to vote in that election if the city extends service outside city limits.

Proponents of municipalization have said that charter amendment would impose so many restrictions that it would be hard to form or operate the utility.

The City Council earlier this month gave initial approval to a competing charter amendment that would impose a debt limit just on the purchase price of Xcel's system.

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But City Attorney Tom Carr said Tuesday that proposal could end up causing problems down the line.

"Every time we ask someone else to look at this, they throw up their hands and say, 'What are you doing?'" he said, referring to discussions with outside attorneys and financial advisors. "The charter requirements already place limits on debt. Adding additional limits will have an effect on us, and I don't know what effect this will have."

For example, the city could end up facing a lawsuit over what can be included under acquisition costs, thwarting its ability to pay for the system even after a ruling on condemnation.

Councilman Tim Plass said the last thing the city should do is propose an amendment to the charter that would stop it from forming a utility.

"The most ironic situation would be if our own ballot measure stops us from going forward, even if we meet all the charter requirements," he said.

But Boulder Mayor Matt Appelbaum said the charter amendment represents a strong statement about the potential of a municipal utility.

"I think it's important that we be able to say to the public with a high degree of confidence we can acquire the system within this upper bound," he said. "Once you put in that upper bound, a lot of the worst-case scenarios fade away."

Ultimately, the six council members who support municipalization -- Appelbaum, Plass, Lisa Morzel, K.C. Becker, Macon Cowles and Suzanne Jones -- voted in favor of the charter amendment. The opponents of municipalization -- George Karakehian, Suzy Ageton and Ken Wilson -- voted no.

They said it would be better to hold another election next year when all the costs are known.

The other ballot measures are:

An extension of two sales taxes now dedicated to open space, with provisions that move most of the funding to roads and general fund needs after 2034. The 0.33 percent and the 0.15 percent open space sales taxes expire in 2018 and 2019. After that, 0.22 percent of the larger sales tax would go to open space through 2034, and 0.1 percent after that. That allows money for continued bonding for open space to meet its long-term acquisition goals and for operations and maintenance.

The remainder of the 0.33 percent sales tax would go to the general fund. All of the 0.15 percent sales tax would go to roads for the first 10 years and to the general fund for the next 10 years.

A six-year, 0.15 percent tax dedicated to roads to fill the gap between now and the reallocation of the open space tax in 2019.

A 3.5 percent sales and 5 percent excise tax on recreational marijuana, each of which could be raised to 10 percent by the City Council. The council had been set to put a 5 percent sales tax on the ballot, but it lowered the initial sales tax rate to stay competitive with Denver, which is also considering a 3.5 percent sales tax. The state will be seeking voter approval for sales and excise taxes on marijuana in addition to the city taxes.

Negotiated bond sales: Boulder's charter now requires that all bond sales be competitive, but city finance officials believe negotiated sales might offer a better deal for a new municipal electric utility. In a negotiated sale, an underwriter buys the entire bond amount at a negotiated price and then sells them to investors. The underwriter would be selected through a request for proposals.

City officials say this approach allows them to "tell a story" about the bonds that may appeal to investors and get a better deal, particularly when the utility won't have a bond rating yet. Going with a negotiated sale rather than a competitive sale would require City Council approval.

Boards and commissions: Boulder's charter requires that volunteers on city boards and commissions be registered to vote in the city. This excludes non-citizens, and some people believe this reduces the diversity represented on those boards.

This charter amendment would allow anyone who has lived in the city for at least a year to serve on a board or commission. Voters rejected a similar measure in 2008.

Fracking moratorium: This ballot measure would impose a five-year moratorium on fracking in Boulder, unless, after June 2016, a two-thirds majority of the City Council decides it should be lifted.

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